Samsung has a separate division for its TVs, cellphones, and home appliances called Device Experience (DX). According to reports, the company has now been forced to shut off the division’s spending and put it in emergency status. The Korean IT giant has also reduced the frequency of international business travel and international marketing events, as well as cut other expenses in half. According to Samsung, the recent switch to emergency mode was caused by high currency and interest rates, supply chain problems, and declining customer demand in the present current economy.
According to Samsung, the current economic crisis is unprecedented. “We are experiencing a decline in TV and home appliance sales,” a company official told BusinessKorea. “We can hardly anticipate a speedy sales recovery at this point.” A financial information provider called FnGuide predicts that Samsung Electronics’ operational profit will drop by around 29% from the current year to 33.38 trillion won in 2023.
The article also claims that Samsung’s new cost-cutting initiative will cut back on travel and expenses for abroad shows, including the CES in Las Vegas in 2023. Samsung may or may not be on the exhibition floor, but the company plans to have virtual events, or video conferences, to introduce new products. The economic outlook around Samsung Electronics is getting worse every day. The international market for smartphones, TVs, and home appliances has been locked by inflation and geopolitical turmoil.
The DX Division’s total operating profit for the first three quarters of this year was 11.9 trillion won, down 20.4% (2.84 trillion won) from 13.93 trillion won in the same period of 2021. According to market research companies, the market will be worse in 2023 than it is now. Total financial costs for Samsung during the same period were 14,265.8 billion won, up 137.5 per cent from 6,007.2 billion won during the same time last year. Losses from derivatives, losses from currency exchange, and interest costs are among the financial expenses.
Problematically, the economic conditions of emerging nations, which make up a large portion of Samsung Electronics’ primary markets, are deteriorating as a result of a strong dollar and rising interest rates. The inventory assets of the DX Division were 27,097.4 trillion won as of the end of September, an increase of 12,831.6 trillion won over the previous twelve months.
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